"Herd" mentality

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douglyzia

douglyzia

Premiership Player
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Sep 24, 2006
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Australia
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I was thinking of posting this in the "General Markets Talk" thread, but then I saw an individual posting in a wanky manner, using all sorts of stock market verbiage to make himself seem important (the same poster who is reviled on his own footy club board for being a deluded w***er). So, on that basis, you'll just have to put up with me posting my thoughts in a separate thread, because I'd rather not have my opinions associated with said w***er.

So ..... I read all these articles with all of these so-called stock market experts cautioning against the "herd mentality" when it comes to selling all your stocks given the panic (unjustified IMO, but my personal opinion counts for naught when it comes to public sentiment) surrounding COVID-19. They advise that selling all of your stocks will lump you in with the "herd". Now, given that all these "experts" are advising AGAINST selling all of your stocks, wouldn't that make all of these so-called "experts" who advocate holding on to your stocks part of the "herd"? I mean, I have almost literally NOT read a single "expert" advocating that you sell ALL of your stock given the current market uncertainty. Seriously, WHERE ARE THEY?! (if for nothing else, than for some diversity of opinion). So, if you hold on to your stocks, are you not part of the "herd"? Something to think about.

I mean, if you had listened to all of these "experts", your net worth would have already decreased by a not-so-insignificant percentage. Yeah, yeah, yeah, I know, given enough time the stock market will adjust back to (or higher than) current levels. But this is just so ******* stupid. If you KNOW that the market is going to tank (in the short term, at least) with the uncertainty surrounding COVID-19, wouldn't you be better off backing out and putting that money elsewhere, like a guaranteed fixed percentage return, before re-investing when the stock market is on the uptick? How long are you prepared to wait to recoup your losses? 1, 2, 5, 10, 15 years? YES, of course, given enough time, it will return to its current average. But, if you can avoid it, why bother? Seriously, it's so stupid. * all these "experts", man. "Take a loss now, you'll make it back eventually." LOL!

Oh, I know, but you are all short-term fortune tellers, able to predict the future (like this wanky poster in the GMT thread bragging about how cool he is in the current market) who is able to profit even in a bear market. If that is the case, go for your life!

Disclaimer 1: Yes, my net worth did take a very slight hit. But not to the extent of the "herd" who listened to all of these stupid "experts" telling them to do nothing. Sucks to be you. But it's not too late to back out now.

Disclaimer 2: This could be the very FIRST commentary advising you to BACK OUT of the stock marketer before it gets worse. Who's part of the "herd" now? Think it about it!

Disclaimer 3: Do not take financial advice from a poster on an internet footy forum.
 
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Where are these "experts" telling people to sell, Scott? I don't see them anywhere. The only "experts" I see are people like you telling investors to do nothing and continue to lose their money as the market continues to tank. Scott Phillips is, in fact, well and truly, part of the "herd".

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And the excuses come thick and fast. Blind Freddy could see that COVID-19 (a once-in-a-generation phenomenon) was causing widespread panic and economic instability.

The guy above works for Motley Fool. Do NOT trust Motley Fool.

Disclaimer: Do not take financial advice from an internet poster on a footy forum.
 
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Think there's a little bit in this. I'm surprised by the sheer volume of advice that is predicated around just following the market. Yes in the long run shares tend to go up but it's hardly crazy to have said a week or two ago, that this looks bad and step out of the market. I think ETFs and a general passivity in the market has swung too far, of you aren't careful by the time you look to act 50% of your balance could be gone.
 

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douglyzia said:
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Where are these "experts" telling people to sell, Scott? I don't see them anywhere. The only "experts" I see are people like you telling investors to do nothing and continue to lose their money as the market continues to tank. Scott Phillips is, in fact, well and truly, part of the "herd".

sp2.png

And the excuses come thick and fast. Blind Freddy could see that COVID-19 (a once-in-a-generation phenomenon) was causing widespread panic and economic instability.

The guy above works for Motley Fool. Do NOT trust Motley Fool.

Disclaimer: Do not take financial advice from an internet poster on a footy forum.
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Yeah that guy is a pelican, someone could probably make money just consistently doing the opposite of what he says.
 
If you're investing for the long term, it is often not worthwhile to sell, especially if you're holding broad ETFs. Many of the stocks I have I intend to have for at least the next 20-30 years (with any luck). I haven't sold anything yet, and don't intend to.
 
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Engimal v3 said:
If you're investing for the long term, it is often not worthwhile to sell, especially if you're holding broad ETFs. Many of the stocks I have I intend to have for at least the next 20-30 years (with any luck). I haven't sold anything yet, and don't intend to.
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I understand this thinking (which I obviously don't agree with, because I'm not part of the "herd"). I guess my thinking was, wouldn't it better to offload your stocks (and sleep better at night), and have a cash reserve to load up on when the market is ready to rise again? I couldn't imagine having to stress every day about how long it's going to take to recoup my losses.

I know the DJ rose with Trump's latest speech. But how did Trump's speech mitigate the (near-term) continued escalation in confirmed cases and deaths of COVID-19, as well as the continued closures of businesses and shutdown of economies? Answer: It didn't.

Disclaimer: Do not take financial advice from an internet poster on a footy forum.
 
douglyzia said:
I guess my thinking was, wouldn't it better to offload your stocks (and sleep better at night), and have a cash reserve to load up on when the market is ready to rise again?
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Sounds good, let me know when the bottom will be and I'll tip my cash in then. Disappointed you didn't let me know about the collapse that occurred 3 weeks ago in advance though.
 
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ash_1050 said:
Sounds good, let me know when the bottom will be and I'll tip my cash in then. Disappointed you didn't let me know about the collapse that occurred 3 weeks ago in advance though.
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Err, my OP was on Mar 8, by which time I had already offloaded my stocks, and which would have saved you a decent bundle if you had exited after reading it.

I didn't realize I had a duty of responsibility to bestow my clairvoyant premonitions onto the plebs of this forum, even though I graciously did so on the 8th of March (which you duly ignored in any case).

I mean, forgive me if I did not have the inclination to share my concerns about the impending crash of stock markets to individuals who were going to ignore it anyway.

Not that I would want you to take financial advice from an internet poster on a footy forum.

Disclaimer: Do not take financial advice from an internet poster on a footy forum.
 
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If you've been following the news, you would have read the controversy over several US senators dumping their stock after being briefed on the impending fallout from COVID-19.

How come these (rich) senators didn't listen to all the "experts" like Scott Phillips telling them to do ABSOLUTELY NOTHING!?
 
craffles said:
Ok
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These senators should have listened to "experts" like Scott Phillips telling them to do ABSOLUTELY NOTHING instead of dumping their stocks. If they did, well they wouldn't be in so much s**t now, would they? Better to lose millions than to be investigated or scrutinized for insider trading.

I mean, Scott Phillips is a genius! After all, it's just your normal, average volatility when comes to the stock market. It's not like COVID19 is a once-in-generation-phenomenon that is going to lead to an unprecedented extended global shutdown of economies worldwide. No, no, no, no. Nothing like that at all!
 
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douglyzia said:
These senators should have listened to "experts" like Scott Phillips telling them to do ABSOLUTELY NOTHING instead of dumping their stocks. If they did, well they wouldn't be in so much s**t now, would they? Better to lose millions than to be investigated or scrutinized for insider trading.

I mean, Scott Phillips is a genius! After all, it's just your normal, average volatility when comes to the stock market. It's not like COVID19 is a once-in-generation-phenomenon that is going to lead to an unprecedented extended global shutdown of economies worldwide. No, no, no, no. Nothing like that at all!
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thanks
 

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It's becoming more evident that in many fields the concept of an expert is a myth, particularly with the sharemarket. The COVID-19 crash and subsequent recovery is both an example of how wrong experts are and herd mentality at play.

That said, I do put a little more faith in "experts" who manage pension funds, these people have to invest for long term positive cashflows with huge repercussions if they get it wrong. On the flip sides are real estate "experts" (bears or bulls), their ability to select the information that fits their narrative is astounding.
 
sabre_ac said:
It's becoming more evident that in many fields the concept of an expert is a myth, particularly with the sharemarket. The COVID-19 crash and subsequent recovery is both an example of how wrong experts are and herd mentality at play.

That said, I do put a little more faith in "experts" who manage pension funds, these people have to invest for long term positive cashflows with huge repercussions if they get it wrong. On the flip sides are real estate "experts" (bears or bulls), their ability to select the information that fits their narrative is astounding.
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The reality is, the market will always recover and perform thus buying in down turns is a no brainer. Especially buying stocks that deliver dividends and cover holding costs.

If in the rare occasions this rule doesn't stand true and the market fails, banks fail, currency fails, food security fails and you have all out anarchy meaning holding gold bars is useless and your house will get burnt down during the civil unrest.

There is a clear choice and you have more to loose by not getting in, fearing you may not pick the bottom than not acting.

This was the easiest period to get 100 to 400% returns in 10 weeks ever.
 
burge13 said:
Most people are wrong most of the time. Most people don't have savings to live a month if they lost their jobs.
Don't be like most people
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That's why we all knew the economy would be opened up again quickly.

We also know most people act on fear rather than success, so we also knew what democratic government would do and when.

1) s**t I'm scared of Covid - government shuts everything down just fast enough or slow enough to give us a taste of death
2) s**t I'm scared I can't provide for myself, my family and may loose my job and home - government says "it is up to the states to reopen but we strongly urge they do as quickly as they deem safe"
- Yeah thanks government you kept us safe and then kept our job
- Covid comes back - government says the states are responsible for opening too soon or not putting risk mitigation in place


Some will read that and say "government is corrupt and manipulating" when in fact they are just delivering what we demand.
 
Power Raid said:
That's why we all knew the economy would be opened up again quickly.

We also know most people act on fear rather than success, so we also knew what democratic government would do and when.

1) s**t I'm scared of Covid - government shuts everything down just fast enough or slow enough to give us a taste of death
2) s**t I'm scared I can't provide for myself, my family and may loose my job and home - government says "it is up to the states to reopen but we strongly urge they do as quickly as they deem safe"
- Yeah thanks government you kept us safe and then kept our job
- Covid comes back - government says the states are responsible for opening too soon or not putting risk mitigation in place


Some will read that and say "government is corrupt and manipulating" when in fact they are just delivering what we demand.
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It's also why the most affected states are pushing to reopen the borders, because a second wave of infections is going to occur as the small number of infections begin interacting and are found through testing and the larger your starting base the higher the bounce back will be. If that second wave is national then it's a national issue and we are all in it together, if it's just in Victoria and NSW then it's a local problem with clear people in charge and at fault.
 
Taylor said:
It's also why the most affected states are pushing to reopen the borders, because a second wave of infections is going to occur as the small number of infections begin interacting and are found through testing and the larger your starting base the higher the bounce back will be. If that second wave is national then it's a national issue and we are all in it together, if it's just in Victoria and NSW then it's a local problem with clear people in charge and at fault.
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I never thought of that angle but yes, that makes sense

The high court challenges will be interesting. I didn't like the shutting down of boarders, as I don't see a vaccine coming. However the argument of getting supplies, processes, training and community education made sense for a short shutdown.

I feel the high court will rule in favour of preserving the constitution and the sates having to reopen. That forms another easy way for the premiers to wash their hands, saying they had no choice.
 
Power Raid said:
The reality is, the market will always recover and perform thus buying in down turns is a no brainer. Especially buying stocks that deliver dividends and cover holding costs.

If in the rare occasions this rule doesn't stand true and the market fails, banks fail, currency fails, food security fails and you have all out anarchy meaning holding gold bars is useless and your house will get burnt down during the civil unrest.

There is a clear choice and you have more to loose by not getting in, fearing you may not pick the bottom than not acting.

This was the easiest period to get 100 to 400% returns in 10 weeks ever.
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I'm very much a capitalist and have been lucky during the COVID period, but isn't there something fundamentally wrong about the notion that those of means will profit from this event? It's probably a pointless question as there is no real answer to it that presents a better alternative.
 
sabre_ac said:
I'm very much a capitalist and have been lucky during the COVID period, but isn't there something fundamentally wrong about the notion that those of means will profit from this event? It's probably a pointless question as there is no real answer to it that presents a better alternative.
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If someone is stupid enough to offer to sell something at 10% or 25% of fair value because they don't have patience; do you reject the offer?


The golden rule in finance is "the patient take wealth from the impatient"

and the day your heart sinks and you feel the market can fall into an abyss...............is the day you fill your boots and buy
 
Power Raid said:
If someone is stupid enough to offer to sell something at 10% or 25% of fair value because they don't have patience; do you reject the offer?

The golden rule in finance is "the patient take wealth from the impatient"

and the day your heart sinks and you feel the market can fall into an abyss...............is the day you fill your boots and buy
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That's a good point, great buying opportunities only exist because of panic, the ratio of those who come out of a situation like this ahead in the share market compared to those behind is a wash.

I think my point is more in regard to the luxury of being liquid in moments like this, which is a wealthy persons game.
 
sabre_ac said:
That's a good point, great buying opportunities only exist because of panic, the ratio of those who come out of a situation like this ahead in the share market compared to those behind is a wash.

I think my point is more in regard to the luxury of being liquid in moments like this, which is a wealthy persons game.
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there is no doubt being liquid is easier when you have a balanced portfolio and one can "reserve" funds in liquid positions

there is also a benefit to being young with no kids, regular income and savings as you can go harder in tough markets than someone in the exact opposite position in life. That's why I recommend building wealth from the age of 5 years old.

For kids uncles and parents should say to kids, here is you birthday and christmas money...........but it goes into the bank. Anything you have in the bank at the years end, we'll match it dollar for dollar. $100 for birthday and $100 for Christmas (from the entire family) and then doubled at years end is a pretty handsome start for a 5yo.

Then instead of leaving money in the banks generating 0% interest, buy bank stocks (in a family trust which costs $0 to set up) and get 7.5% dividend yield. Banks are highly liquid and easy to get out of.

Every 7 years or so, there is a correction. The markets were toppy late last year, so selling out of growth stocks made sense and all we had to do was wait for a reason for a correction........even if that was just the US election. Covid was a surprise not many saw coming but from a financial markets point of view, Covid was a non-event but we all knew the damage governments would do.

For me I set myself a rule of buying around $100k a fortnight on bank stocks and then wait for the day my heart sank. That was the 18th of March and that's when bought up hard putting in $500k in a single day.

The easy to pick winners were Myer (350+% returns), VRL (200+%) and qantas (100%). Then from there you then go down into the distressed stocks doing capital raises and companies like MXR offered 300% returns this fortnight.



There is always opportunity and loads more in bad times than good times
 
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